Gold prices today were up 0.1% or $1.20 in morning trading to $1,122.60 an ounce as investors piled back into equities. Despite the gain, gold prices are still down from about $1,160 an ounce in late August.
Disappointing economic data out of China ignited new stimulus hopes from the Chinese government. That helped buoy markets around the globe and sent many investors back into securities.
Data Tuesday showed China's imports contracted more than expected in August, shrinking for the 10th straight month. Imports to the Asian nation slipped 13.8% year over year, well below the 8.2% drop economists were expecting.
Still, China's Shanghai Index ended the day with a near 3% gain as investors expect more government intervention. Also fueling gains were reports that railway projects worth some $11 billion have been approved.
European markets also rose. Key stock indices in the UK, France, and Germany were all up more than 1.5% midway through Tuesday's session.
U.S. markets jumped on the open. Shortly after the opening bell, the Dow, S&P 500, and Nasdaq were all up roughly 2%.
Amid the robust global rally, gold prices today held firm.
Another bullish sign for gold prices today came from oil. Some analysts believe crude oil may have found a floor, which would be a bullish sign for the entire commodity sector.
With gold prices today slightly higher, investors are now turning their attention to the U.S. Federal Reserve. The Fed's decision on whether or not to raise interest rates will have a major impact on gold prices now...
Gold Prices Today Await Fed Decision
Gold prices are expected to trade in a tight range ahead of the Federal Reserve's policy meeting on Sept. 16 and Sept. 17. They have already been pressured for months by prospects of the Fed's first interest rate increase since June 2006.
A looming interest rate hike from the U.S. central bank has helped knock the gold price down 5.54% year to date and 11.92% over the last 12 months. Projections of a rate hike have also tarnished gold's strong safe-haven status.
Gold prices tend to climb when interest rates are lower, so any news about the Fed raising interest rates will send prices down.
Rising interest rates would also strengthen the dollar. That's important because gold becomes more expensive for those with foreign currencies, thus bringing its price down.
And the August jobs report on Friday also provided little clarity on whether the Fed will raise interest rates.
Job growth came in at a modest at 173,000 last month. But the unemployment rate dipped to 5.1%, which was the lowest read in seven years. However, initial August job figures have been revised significantly upwards every year since mid-2009. Those data points suggest a solid U.S. labor market that can handle a small interest rate boost.
Despite today's gain, the gold price is still down from the highs over $1,300 they hit last December. This offers one the best opportunities to buy the precious metal in a decade, according to Money Morning Resource Specialist Peter Krauth.
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- The Wall Street Journal: Gold Prices
- CNBC: US Stock Futures Briefly Up 300 Points, Point to Wall Street Bounce
- Reuters: Gold Eases Back Toward 2-1/2-Week Low After U.S. Jobs Data